If you've been watching the housing market lately, you probably noticed that sellers have had the advantage for the last few years. But now that inventory is on the rise, could that change? Here’s what you need to understand.

What Is a Balanced Market?

A balanced market usually means there’s about a five-to-seven-month supply of homes for sale. In this kind of market, neither buyers nor sellers have an upper hand. Prices tend to level off, and there’s a decent selection of homes available. After years where sellers held all the power, a balanced market would definitely be a positive change for those looking to buy. The big question is – is that truly where the market is going?

At the beginning of the year, we had about three months' worth of homes available on the market across the country, and now that number has risen to four months. While that might not seem like a significant change, it indicates that we're moving closer to a balanced market, though we're not quite there yet. It's also worth mentioning that this increase in inventory isn't resulting in an oversupply that could trigger a market crash. Even with the recent growth in inventory, we still have a long way to go before reaching a level that would pose any risk.

The graph below, based on information from the National Association of Realtors (NAR), shows how inventory levels have changed over time, along with where things stand today.

It's still a seller's market right now, but the intensity has cooled a bit compared to the past few years. Mark Fleming, Chief Economist at First American, points this out.

““The faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes.”
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— Mark Fleming, Chief Economist at First American

What This Means for You and Your Move

Here's how this change affects you and the market conditions you'll encounter when you decide to move. Lawrence Yun, Chief Economist at NAR, explains:

““Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
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— Lawrence Yun, Chief Economist at the National Association of Realtors (NAR)

The graphs below utilize the most recent data from NAR and Realtor.com to illustrate these changes.

Homes Are Sitting on the Market Longer: With more homes available, they're not flying off the market like they used to. For buyers, this gives you a bit more time to figure out which home is the right fit for you. As for sellers, getting the price right is crucial if you want to make a sale. If your price isn’t competitive, buyers will likely opt for other homes that are better priced.

Sellers Are Receiving Fewer Offers: As a seller, it's important to be open to adjusting your price or terms if you want to finalize the sale. On the other hand, buyers might notice a decrease in competition, giving them a wider range of options to consider.

Fewer Buyers Are Waiving Inspections: As a buyer, you have more leverage in negotiations these days, which is why many buyers are choosing not to waive inspections. For sellers, this means you need to be prepared to negotiate and handle repair requests to ensure the sale stays on track.

How a Real Estate Agent Can Help

This is just the national overview. The market conditions can differ significantly depending on the inventory available in your area. It's a good idea to consult with a local real estate agent for a clearer understanding of how your specific market is performing.

Whether you're looking to buy or sell, being aware of market changes can give you a significant edge. Your agent possesses the most up-to-date data and local knowledge, ensuring you have a clear picture of the situation and how to handle it effectively.

Bottom Line

The real estate market is constantly evolving, so staying updated is crucial. Whether you're looking to buy or sell, being aware of the move toward a balanced market can be beneficial. If you have any questions or need some expert guidance, feel free to reach out.